The Smart Way to Buy a Car in Today’s Market

Buying a car today isn’t what it used to be—and in this episode, PCM’s Irvin Schorsch and Andrew Randisi break down what’s changed and how to make smarter decisions. From interest rate trends and lease incentives to the rise of EVs and the risks of negative equity, they offer practical, real-world guidance on navigating a complex car market.

Whether you're eyeing a luxury vehicle, an everyday economy car, or exploring hybrid and electric options, this conversation covers the key questions every buyer should ask. Irvin and Andrew also dive into the financial planning side of car buying—when to lease, when to finance, and how to avoid costly mistakes.

What you’ll learn:

• How to negotiate smarter using online tools
• When leasing may be better than buying
• Why EVs aren't holding value like expected
• What manufacturers are doing to move inventory—and how to benefit
• How to align car buying decisions with your financial plan

🎧 Tune in to get expert insights and avoid common pitfalls when buying your next car.

Thank you for listening. For more information about how we can help you achieve your financial goals and live a life you love, please visit PCMAdvisors.com.

Transcript

Lesley: [00:00:00] Welcome everyone to our podcast this week. We're joined by Irvin Schorsch and Andrew Randisi. They're going to talk about cars. They are our car guys at Pennsylvania Capital Management. They know a lot about cars. They love to talk about cars. So this is going to be a fun one. So Irvin, take it away.

Irvin: Thank you, Lesley. Andrew, buying a car has become ever more complicated. It used to be you went to your dealer, you negotiated the best price you could, and you drove away the car of your dreams. It's not that way anymore. The world has changed. And what's been your experience as you're helping our clients?

Andrew: It all really depends what type of car you're looking for. Each manufacturer is facing its own supply constraints. Some manufacturers have overproduced the cars, they can't get rid of them. Others are not producing enough so they can still keep the prices fairly high but I [00:01:00] think it really starts now instead of going to the dealer your best bet is to do your research online. Once you've honed in on the brand, the make, the model, the trim, the color, all the specific gizmos that you want starting online with an assortment of dealers and reaching out with a generic email and let them battle it out to see how you can get the best price is the first way to start.

That way you don't have to walk in the five or six different dealers and the wind up is waste a lot of your time. 

Irvin: Good point. Actually, I think it's a great point. We don't want to waste our time with the internet being readily at hand for all of us. There's no reason to spend all that time when you can get the details.

 As I take a look at this challenge, what makes it so complicated from my experience is when I go to negotiate a car, we can either use bank financing, we can pay cash or we can lease. But the key here, and I [00:02:00] think clients don't quite perceive this, is that the manufacturers have something in mind to move their cars at all times.

We're seeing more and more lease deals. They want to get the old iron off the parking lot and get it moving. And they can adjust that lease deal in one of two typical ways. They can build a lower cost of money factor in, or they can build up a higher residual, which means the monthly payments will be less.

And actually, then they can dress it up and say, we're going to give you a low payment, but we want a huge down payment, so that in effect you're only paying a smaller percentage of the car because you already paid for a key piece.

Andrew, as you talk to clients, what are you finding clients prefer more these days? Buy? Lease? Or use the bank's money. 

Andrew: I'd say with most of our profession in general, it's always going to be, it depends. And I'd say it really starts whether you're buying like a major domestic [00:03:00] brand or a economy car.

So for example, something like that, we're seeing more of our clients that they were going to want to own it for a longer period of time. We're seeing more purchasing the car outright. For example, in our most recent case, we had a client, he wanted a Mazda Miata - cute little car.

0 percent financing for 36 months. Why use my money in the bank? Or pull it out of the market when Mazda financial or Toyota financial since Toyota owns a good chunk of Mazda is going to be footing the bill. It's an interest free loan. Do that. We have another one of our clients.

She always gets a great deal from Nissan. So has been getting 36 months, 0 percent financing. Now that's more of the economy cars that you're going to keep for a long period of time. More of our high end luxury cars that we see clients want to buy, the Mercedes Benzs, the Porsches, the BMWs,

oftentimes in [00:04:00] those cases it might make more sense to lease. After three years car usually goes out of warranty. That's when those high end German cars tend to have stuff break, or you get tired of it and want a new one. Oftentimes that's when it makes more sense to lease, because we've seen a lot of clients who have purchased a Mercedes Benz, and then right away, oh, I made a bad decision on buying that, and I'm now upside down.

Or you have what we like to call negative equity, where your loan is now worth more than what the car is. And that can be a problem to get out of, because you'll have to pay money out of your pocket to get out of it most of the time . And that interest rate has gone up because originally during covid they were borrowing at zero, they're borrowing at five percent plus now the manufacturer will say okay we'll eat a little bit of that per month. I'd say Stellantis which owns Chrysler, Jeep and Dodge, they're having a hell of a time right now [00:05:00] because they've mass produced all these cars.

Jeep went upmarket to try and compete with Cadillac and the higher end luxury automakers and no one wants to buy the car because if I'm going to spend a hundred grand, I'm going to buy a Cadillac Escalade or a Mercedes Benz G Wagon, not a Jeep Grand Wagoneer. And these cars are just sitting and rusting on the lots.

Irvin: I think my favorite example recently was at BMW, where they had lots of them . And this particular dealer up in the Northern Philadelphia suburbs cut an amazing deal - they had to get rid of them.

They literally gave the car away almost at cost, I calculated the numbers, just because they had to get rid of it.

And it's the end of the month. And if they're floor planning, remember that typically car dealers don't pay for their cars. the first month, I've heard from some of our car dealer clients, they'll get [00:06:00] the floor plan for free. Okay. After that, they're on and they've got to pay that interest. So they have a big incentive to get it out by the end of that first month so they don't lose money on the floor plan but the longer it goes the more they lose so it actually becomes worth their while to make no profit, or very little, just to get the cars moving like you were saying. I think that's a really important point for our viewers as far as going into this season as I mentioned all year long that the manufacturers each have their own game. Now it's get the cars out because in September, most of the new car manufacturers come out with their next year's models a little bit early.

So to move the 2024 is right now are clutch. They want them out of it. And you get some very good deals toward year end, just like you also get good deals at the month end, just before they close their books and they'll incentivize their salespeople to [00:07:00] sell, lease, whatever they can. And everybody's got the incentive to give the client the better deal.

Let's shift gears here a little bit to an article which I saw in Bloomberg here this week. VW, Mercedes, and the German car manufacturers in particular are getting left in the dust by China's EVs in China and since China is a major opportunity for these car manufacturers to sell lots of their units. The Chinese cars have come on very strong and BMW is an example posted a 30 percent plunge in their third quarter sales, Mercedes declined 13 percent and VW has had a very tough time as well. And this is not just at the low end, but at the high end, even S class and [00:08:00] Maybach limousines are in the sights of the Chinese manufacturers. And you can see very high end cars at a third less.

Big money. We'll see with the tariffs coming down the road, how that's going to impact the clients, but clients need to be aware that if you still like those German cars or Japanese cars, as you were saying, there's some great buys out there because they want to move the cars. Andrew, have you found any change in terms of buying habits of the clients here in the last few months, given what's going on with these with the Chinese competitors?

Andrew: So far we haven't seen most with those Chinese manufacturers haven't crossed yet into the states or if they are stateside, it's still a very small market share. And we know they're going to be hit with a substantial tariff because we don't want the U.S. Manufacturers to be undercut [00:09:00] by Chinese cars, and it's gonna be tariffs are gonna most more likely gonna follow the origin because if they're coming from China, they're gonna get hit with a tariff. If they're made in Mexico and then try to jump over the border, they're gonna get hit with a tariff, too, because it's still a Chinese vehicle. But I'd say in terms of the mix, we're seeing some clients still want gas, internal combustion, seeing a lot more clients move towards hybrid and we do have clients that like the electric vehicles too. Mainly though for the electric vehicles Tesla is still probably, if you're going to buy an EV, probably still buy a Tesla because a lot of the other manufacturers, they can't get rid of their EVs.

If you buy an EV if it's not a Tesla, it just depreciates like a stone and you're upside down on that car. The EV adoption rate has not taken off as everyone had expected. And then also we'll be more than likely seeing that $7,500 rebate that was part of the Inflation Reduction Act. That's most more than likely going to be clawed back next [00:10:00] year. That's going to make the electric vehicles more pricey to begin with. 

Irvin: I'm glad you brought that up, meaning the EVs. I think it's fascinating to see Toyota, BMW and Porsche all focusing on bringing out a hydrogen powered car.

As we know, it's not necessarily more fuel efficient, but better for our environment. Considering what comes out of a car is to a great degree, hydrogen along with oxygen. This could bring a whole new opportunity for our clients and for purchasers of cars everywhere to do something as good for the environment as well as good for their family.

And we're watching closely to see what they come out with. I for one would like to be an earlier buyer, if I can find one that still has good acceleration, obviously excellent handling as long as being good for the environment. So I'm curious to [00:11:00] see what's going to come of that. 

Andrew: The main issue with hydrogen electric vehicles is the adoption rate on being able to get the car refueled or recharged.

You see a lot more hydrogen vehicles cause the cool thing with those vehicles, water spits out of the tailpipe instead of carbon monoxide and dioxide. California has a lot of those hydrogen stations. California has been more EPA environmentally friendly state leading the charge.

But it's a struggle getting higher in the Midwestern part of the country to get EV adoption rates. Good luck telling a Iowa farmer to buy a hundred thousand dollar Chevy EV Silverado. And try and put up a charging station next when you can get gas for $2.50, $3 a gallon and buy a $45,000 Chevy Silverado gas truck.

That will do the job. And you don't have to wait 6 to 12 hours to charge [00:12:00] your vehicle. That's really the main struggle with the whole EV adoption. The country doesn't have the infrastructure to support mass charging stations yet all over the country. Now Tesla's doing a fabulous job. They've been leading the charge but we're just not there yet. It's gonna take decades. Because once you get the network set up, we don't have the grid from the power plants to be able to support all that. It's going to be a multi decade project to see to fruition these lofty EV goals.

Irvin: We shall see. Look, it's a very exciting time, as I said, when we started, the client sees it as, I want to buy a car and they've got something they're excited about. They come to us and say, help us. What's the best way to either minimum deposit this or utilize bank money or our margin borrowing or other things, and obviously that's our role to figure out what's optimal for each client. But it's [00:13:00] an exciting time. It really is. And thank you for joining us today. We hope you enjoyed this podcast and we'll have many more to come.